DOD's missed opportunity to improve services acquisition

On Jan. 5, the Defense Department released its long-awaited DOD Instruction to guide the acquisition of services.

In the works for nearly two years, the new guidance is designed to address long-held concerns that the department lacks a disciplined process for the acquisition of services. The instruction went through multiple iterations, was repeatedly reviewed by senior leadership and is effective immediately.

So what is the result? The answer is a mixed bag.

Given the fact that services account for more than half of DOD’s contract spend, and that many services contracts today have high dollar values, it is hard to argue with the premise of the instruction.

On the other hand, both practically and perceptually it is worrisome that the instruction is based on a process designed for major weapons systems procurements (the DoD 5000).

The new instruction establishes a wide range of review, approval and oversight across six levels of services acquisition categories (S-Cats), defined by dollar value.

While in concept that may make sense, given the need for much increased velocity in the acquisition process, it raises concerns as to whether the process will be, as the 5000 series too often is, balky and bureaucratic.

But it is what is missing that is most troubling.

Indeed, had there been opportunities for outside review and comment on the instruction, a number of important and good recommendations would have been made.

For example, the instruction is silent on the substantial changes taking place across the services sectors, driven by the emergence of the “as a service” model, the convergence of technology and services, the incredible pace of change in applied technologies, and more.

Instead, contrary to those seminal trends, the instruction is rooted in DOD’s existing services taxonomy, and mostly separates IT and services procurement processes.

The tendency to remain rooted to the past is also evident in the instruction’s treatment of performance-based contracting. To the department’s credit, the instruction strongly advocates for performance-based contracting. But even the use of that term reflects a too narrow and traditional perspective.

After all, what will really drive change and innovation is a performance-based approach to the entire acquisition lifecycle, from concept and requirements definition and running throughout the life of a program.

This distinction is not minor; to suggest this is fundamentally a “contracting” problem merely exacerbates a long-held misperception.

Similarly, the instruction represented a crucial opportunity to reiterate, in no uncertain terms, some of the key themes of the Better Buying Power initiative begun by now-Sec. Ash Carter and continued by Frank Kendall.

This includes, but is not limited to Kendall’s repeated admonitions to rely on critical thinking rather than rigid rules or process and to avoid lowest price-technically acceptable acquisition strategies for anything other than the most commoditized needs and that doing otherwise is inimical to driving innovation and optimal success.

Given what we have seen recently at DISA and elsewhere, that message clearly needs to be hammered home ever harder.

Likewise, the instruction makes repeated mention of the “tripwires” created by the Navy to help ensure it does not overpay for contractor skills. But it makes no mention of how and where the tripwires are working, or not.

Yet, when we see procurements that result in high level engineering skills being procured at the tripwire for administrative support (or about 1/3 the tripwire prescribed hourly rate for the relevant skills) that becomes an important and highly relevant question.

The singular focus on rules and process may well have been intentional. This is, after all, a binding instruction.

But let’s face it. In a system dominated by rules and process, too often at the expense of a focus on outcomes, the workforce is far more likely to read and pay attention to a binding instruction than it is to anything else.

Thus, while it is important to clearly lay out all the process and review requirements, that is far from enough. We simply cannot afford to miss any opportunity to stress the themes, strategies and concepts that will, in the end, be most central to success.

This instruction offered a chance to holistically link all of the pieces together; to define a clear construct of how best to access and acquire the best capabilities available.

In that sense, whatever its organic strengths or weaknesses, the new instruction mostly represents an important lost opportunity, one that may not be available again anytime soon.

About the Author

Stan Soloway is a former deputy undersecretary of Defense and former president and chief executive officer of the Professional Services Council. He is now the CEO of Celero Strategies.

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